Alice has to have Bob's details in order to originate the payment. The originator defines the amount and description, and provides Bob's bank information (account and routing numbers). Bob rents an apartment from Alice and Alice wants to collect $1,000 in rent from Bob. The RDFI (receiving depository financial institutions), will get the message from the network that a payment has been created, and will be in charge of verifying the validity of the beneficiary's information and routing the funds to their account (or returning the payment if the details are Invalid)ĪCH debit is a payment type used to pull funds from an account at a different financial institution.Įxample: Alice has an account on Chase and Bob has an account on Bank of America. It then transmits the payment details to the network, and ultimately moves the funds to the RDFI through the network. The ODFI (originating depository financial institutions) is connected to the payment network, and is in charge of verifying Alice's information, as well as the payment details. Once the payment is processed, the funds will be credited to Bob’s account. The funds will be debited from Alice’s account as soon as she creates the payment. Alice must have Bob's banking details in order to make the payment. The originator defines the amount, description, and provides Bob's bank information (account and routing numbers). Alice wants to pay Bob $50 for walking her dog. ACH Credit ĪCH credit is a payment type used to push funds from one account to another.Īlice has an account with Chase, and bob has an account with Bank of America.

The network is governed by a body (NACHA) that defines the rules and guidelines for participation in the network. It is an open loop payment network, that connects several financial institutions through a centralized 'clearing house'.

ACH (stands for Automated Clearing House) is one of the most common methods of payment in the US.

Ach debit or credit